Deflategate Part II – Discussions with Draghi

By now just about everyone in America is aware of Deflategate, or the alleged air pressure manipulation of footballs in NFL games played in the Boston area. Well, if I were writing a sequel today, it would have nothing to do with Tom Brady and the Patriots, but instead feature the play in the euro driven by the discussions of an influential central bank quarterback, Mario Draghi. Recently, hot air has had some serious implications for the euro/dollar trade and commodities as well, whether it has come from the ECB or the U.S. Fed. I would go so far as to say it has inappropriately inflated the dollar versus a deflated euro. As a result, I see long positions in the dollar using the PowerShares DB US Dollar Bullish (NYSE: UUP) extended and recommend their disposal. See Deflategate The Sequel here. Article interests PowerShares DB US Dollar Bullish (NYSE: UUP), PowerShares DB US Dollar Bearish (NYSE: UNP), CurrencyShares Euro (NYSE: FXE), SPDR Gold Trust (NYSE: GLD), iShares Silver Trust (NYSE: SLV), Caterpillar (NYSE: CAT), United States Oil (NYSE: USO).

Kaminis is long USO. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Why Gold is Not Gaining on Greece

Gold investors may be dumbfounded this Monday morning by the inaction of the precious metal. The Greeks voted “no” over the weekend and stocks opened to turmoil on Monday. Uncertainty around the Greece issue has never been more prominent, and yet the SPDR Gold Trust (NYSE: GLD), which tracks the spot price of the metal, was relatively unchanged in the early AM on Monday. The reason is simple, the dollar factor still outweighs the safe haven factor for gold, and so as the dollar gained this morning, the upside for gold was stymied. Thus, it does appear the Greek Gods show no favor to gold. See the report on Greece & gold here.

Precious Metals Relative Security	Monday at Noon
SPDR Gold Trust (NYSE: GLD)	+0.2%
iShares Silver Trust (NYSE: SLV)	+0.5%
Market Vectors Gold Miners (NYSE: GDX)	+1.4%
Market Vectors Junior Gold Miners (NYSE: GDXJ)	+0.1%
Direxion Daily Gold Miners Bullish 3X (NYSE: NUGT)	+3.9%
Randgold Resources (Nasdaq: GOLD)	+0.9%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Euro Manipulation – I Feel So Dirty

The euro made a dramatic reversal that seemed to make very little sense Monday, and so I feel kind of dirty. The euro was down dramatically 1.9% versus the U.S. dollar in overnight overseas trading on obvious Greece concerns. Yet, by afternoon trading in the U.S., it was sharply higher versus the dollar. It was unnatural and had a lot to do with the actions of the European central banks plus a strangely timed news bit about Puerto Rico. I feel like my money has been touched inappropriately. See my report on euro manipulation. Article interests CurrencyShares Euro (NYSE: FXE), PowerShares DB US Dollar Bullish (NYSE: UUP), PowerShares DB US Dollar Bearish (NYSE: UDN), ProShares Ultra Short Euro (NYSE: EUO).

Disclosure: I'm long EUO and short UUP as a hedge and play on volatility. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Why ISIS’s New Currency Will Outlast the U.S. Dollar

The Islamic State of Iraq and the Levant (ISIL), known to us as ISIS, has reportedly developed its own currency. Normally, you would expect the currency of a criminal and murderous state which is opposed by most of the civilized world, to be worthless. However, ISIS’s new currency is at least as viable as the dollar and could even outlast it; that is because it’s made of gold and silver.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

ISIS seems to have developed a viable currency. Syrian activists recently shared these images of the new currency via social media, but ISIS warned the world it was coming in November. It will be known as the “Islamic dinar” to its tragically misguided followers and perhaps morbid coin collectors. To the rest of us, it’ll be known as gold, silver and copper, and it will carry the relative and respected value of those precious metals (melted down of course).

ISIS is reportedly going to have two gold coins, three silver coins and two copper coins. It’s part of the group’s effort to establish and embed itself as a real bona fide nation. The coin is being modeled after an ancient dinar used during the Caliphate of the Uthman in 634 CE. ISIS cannot trade with dollars or euro, obviously, given its opposition to western civilization. It would not want to justify the civil order that its evil guides seek to displace. Who would believe the dollars weren’t counterfeit anyway? Gold is gold and silver is silver, no matter how bloody the money, and even ISIS should be able to trade with it. The coin shown in the image here is reportedly worth $139, determined by its weight in gold not its place of origin or any central bank manipulation.

How can this golden dinar outlast the dollar? Fiat currency like the dollar is basically given its value based on the viability of the country backing it. It’s a market determined relative value versus other currencies. It’s based on many factors including supply and demand, inflation, the credibility of the country issuing it, and the outlook for that nation’s economy and sovereignty; and some would say the manipulative efforts of its central bank.

The dollar is so strong today because the U.S. economy is the world’s most developed and the U.S. government is the world’s most stable. For as long as America goes unchallenged atop the world, the dollar will remain the strongest fiat currency. And since it is a relative value, it benefits today from weakness in other areas of the world.

However, as the world develops, the dollar must give way to it. Stagnant economies like Japan are still losing ground to the dollar, and the euro has its troubles today, but the development of the world has affected the dollar in a profound manner. In my view, it is the fate of the dollar to weaken over time, and the result of global development. As the rest of the world works its way to an even playing field with America, its currencies will gain ground against the dollar as well. Now, this may be decades or a century in coming, as the world’s governments continue to evolve from monarchies, dictatorships and other forms of inefficient managers of economic growth, but it should eventually come, in theory. I say in theory because before it comes, other disruptions are somewhat probable and could undermine fiat currency across the globe. You know what threats I speak of: war (most likely), global warming, asteroids from space, etc.

In such scenarios where the backing of an economy and government isn’t quite as important or even worth anything at all, what will mankind use to trade in goods and services? It will use a barter system, and in the place of goods, gold as a proxy. So, therefore, ISIS’ new currency could outlast even the all-powerful and supreme U.S. dollar. It was a no brainer for the caliphate wanna-be, and gold should be a no brainer for you and me as well for the same reason. Gold is mankind’s default currency, period.

In today’s society, where we expect everything to stay the same and we won’t allow ourselves to foresee risk of change, gold is influenced by many factors. It retains, however, currency value as evidenced by ISIS of all peoples. Gold is therefore a must own in every portfolio for the long-term. And investors today can own derivatives of gold and silver as well, via the shares of gold miners like Randgold Resources (Nasdaq: GOLD), and ETFs like the SPDR Gold Trust (NYSE: GLD), iShares Silver Trust (NYSE: SLV), Market Vectors Gold Miners (NYSE: GDX), and leveraged plays for short short-term bets or hedges like the Direxion Daily Gold Miners Bull 3X Shares (NYSE: NUGT). Nevertheless, there is no perfect replacement for real physical gold for the long-term holder, as evidenced by ISIS’s ability to trade with it. I cover gold and currency regularly and welcome readers to also follow my blog at Wall Street Greek and column at Seeking Alpha.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only. Article interests Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA).

Merkel vs. Obama - A Game of He Said She Said

Last week, a rumor supposedly leaked from a French government representative indicated President Obama said that the current strength of the dollar was problematic. The dollar weakened on the news, which would serve the U.S. Federal Reserve’s ability to begin its monetary tightening plans; that in turn serves the economy long-term. The President had to deny ever saying it, given its unpatriotic connotations, but I’m sure many market players still believe he said it; and it has impacted the dollar in my view. This morning in Germany, it seems the German Chancellor fired a salvo back onto the currency battlefield. Angela Merkel said a strong euro was not a good thing for nations on the periphery of the eurozone economy. In speaking on the euro and in sharing her indicated preference for current weakness, the dollar recovered some of that previously lost ground and the battle was balanced again in the stealth currency war between trading partners. Though working now into the late Friday afternoon, the dollar is back near where it started the day. See my report He Said She Said. Article interests ProShares Ultra Short Euro (NYSE: EUO), CurrencyShares Euro (NYSE: FXE), PowerShares DB US Dollar Bull (NYSE: UUP), PowerShares US Dollar Bear (NYSE: UDN). 

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Obama's Dollar Diss & EU Market Manipulation

In the wee hours of a solemn Monday morning as I scribbled my thoughts for followers, sometime around 4 AM EDT, I noted a sharp drop in the dollar index. As I scrambled to figure out what had happened to cause the counterintuitive decline, I found what stank of European desperation. In fact, I noted that a series of public statements over the past couple trading days had illustrated that the Europeans are desperate to prop up the euro against a strengthening dollar. As Greece appears headed for a nightmarish scenario for the eurozone, it shows just how concerning the situation really is. However, no matter how much noise is mixed into the trading, the key catalyst for dollar gains remains and it will drive the dollar higher. See my report on the dollar here. Article interests PowerShares DB US Dollar Bullish (NYSE: UUP), CurrencyShares Euro Trust (NYSE: FXE), ProShares UltraShort Euro (NYSE: EUO), Global X FTSE Greece 20 (NYSE: GREK), SPDR S&P 500 (NYSE: SPY), PowerShares DB US Dollar Bearish (NYSE: UDN) and iShares Euro ETF (NYSE: EURS).

DISCLOSURE: Kaminis is long UUP. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Dollar Dazed but NOT Knocked Out

The dollar was dazed recently, knocked down by economic data from Europe. Then it got a second kick in the head last Wednesday when rumors of a more conciliatory EU drove speculation for an impending deal with Greece. The move might have some traders confused given that Greece recently seemed headed toward panic; you might have expected the euro to be expressing as much. I think aggressive investors can look past the last couple days’ action and for a dollar rebound near-term. I suspect Greece will not take the first offer while stubbornly holding to demands. Meanwhile, U.S. economic data due Friday might revive concern about the Fed and its rate hike plans. Over the longer term, I do expect the dollar to drift lower, but not until after another push upward. See my report on the dollar here. Article interests Global X FTSE Greece 20 (NYSE: GREK), SPDR S&P 500 (NYSE: SPY), PowerShares DB US Dollar Bullish (NYSE: UUP), PowerShares DB US Dollar Bearish (NYSE: UDN) and iShares Euro ETF (NYSE: EURS).

DISCLOSURE: Kaminis is long UUP. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Gold, Euro & the Dollar – What’s Next

Gold found some support early this month thanks to worrisome U.S. economic data. The precious metal gained currency against the dollar as questions were raised about the direction of the economy. While the SPDR Gold Trust (NYSE: GLD) was still down for the week thanks to a poor opening to the period on renewed concern about Greece and the euro, economic concern proved an important counterweight. This week presents the likelihood for more of the same mix, so expect volatility. Whichever is weakest, the euro or the dollar, will determine the path for gold. See my article on gold & the dollar here. Article interests PowerShares DB US Dollar Bullish (NYSE: UUP), CurrencyShares Euro Trust (NYSE: FXE) and ProShares UltraShort Euro (NYSE: EUO).

DISCLOSURE: Kaminis is long UUP. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Dollar Resurgence – How to Capture Greenback Gains

The dollar's resurgence of the past week has momentum and is built on substance. Since marking a recent bottom in mid-May, the dollar index spot exchange rate has increased over 4% into May 26 trading. I believe the move was ignited by renewed concern about the euro due to an intensification of concern about Greece. It has been supported by other recent events about the dollar and euro, but it is the Greece issue that I believe gives the move substance and momentum. If you agree, you might use the PowerShares DB US Dollar Bullish ETF (NYSE: UUP) to hedge against any relative risk or to capture the activity, and/or derivatives of the UUP to speculatively capitalize on the move. See the report on the dollar.

Disclosure: Kaminis is long UUP. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Gold vs. Dollar – Guess Which is Today's Favored Geopolitical Capital Flight Destination

As capital makes its flight to safety over the geopolitical scare in Yemen, it has its usual two favorite destinations to choose from. Capital tends to favor U.S. treasuries over gold at times like these, but given the richness of the dollar, gold may gain greater favor this time around. See my full report on gold vs. the dollar in a capital flight to safety. 

Precious Metals & Dollar Relative Securities	03-26-15
SPDR Gold Trust (NYSE: GLD)	+0.6%
PowerShares DB US Dollar Bull (NYSE: UUP)	+0.4%
iShares Silver Trust (NYSE: SLV)	+0.4%

DISCLOSURE: Kaminis is short UUP. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Gold is Now Impervious to Dollar Pain!

Gold exhibited important strength against a dollar headwind last week that I believe implies the precious metal sits on solid ground here and faces little downside risk. Thursday’s impressive performance against dollar strength says to me that it might be impervious to dollar pain at this level. With my expectation that the dollar should top out soon, I think gold investors can make base camp here and wait for upside catalyst; in other words buy. See my full report on gold and the dollar here.

Security	02-26-15	YTD	TTM
PowerShares DB US Dollar Bullish (NYSE: UUP)	+1.0%	+4.1%	+16.8%
SPDR Gold Trust (NYSE: GLD)	+0.3%	+1.7%	-9.4%
Market Vectors Gold Miners (NYSE: GDX)	+0.8%	+13.1%	-19.7%
Market Vector Junior Gold Miners (NYSE: GDXJ)	+0.8%	+9.4%	-36.0%
iShares Silver Trust (NYSE: SLV)	+0.1%	+5.1%	-22.5%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

EUO ETF - I Made You 20% in 3 Months, Now Sell It

In mid-November, I suggested investors buy the ProShares UltraShort Euro (NYSE: EUO). Today I’m suggesting investors close the position and take the 20% profit earned over the 3 month period. I see the factors that have worked against the euro about to reverse, so sell the EUO ETF and take your gain. See my full report on the EUO ETF here.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Short the Dollar – Sell the UUP

Traders with long bets on the PowerShares DB US Dollar Bullish (NYSE: UUP) have enjoyed a great run this year. However, I believe longs should now close the trade and consider shorting the security, as I have, or take a long interest in the security’s inverse pairing, the PowerShares DB US Dollar Bearish (NYSE: UDN). The dollar index was giving way again in overnight trading after dropping in Thursday’s trade. It’s a move I’ve been waiting on for a short while now. My reasoning has been that the Greece euro-zone concern has been overblown, and that as that became apparent to the market, the euro would recover some ground against the dollar. Peace in Ukraine, however fragile, is just a bonus I had not planned on but supports the play. Go short UUP here; I have done so using March at-the-money and June out-of-the money puts. See our report on short the dollar here.

DISCLOSURE: Kaminis is short the UUP ETF. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.